What is it about?
Chris Anderson writes about the transformation of businesses from mainstream hits to niche sales. He talks about the democratization of production and distribution.
What can I learn?
Distribution became cheaper: On average every second 46 songs are bought on iTunes. The buying behavior is shifting and so are the distribution channels. This lowered the entry barriers. Today, nearly everybody can open an online shop, even with little money.
Everybody can produce: Beside decreasing distribution costs, production costs decreased in most parts. Today you can record descent music with Garage Band or buy a the Flip for $200 and start recording HD videos. Or you can make a fortune with online games (e.g. Zynga) without millions in video game production costs.
From mainstream to side streams: Not everybody hears his individual music, reads his individual news or watches his individual movies. A lot of people still like the same things but it became more diverse. There are simply more niches.
The Long Tail was first published in 2005. Today, the book isn’t so exciting because it has become normal to buy niche products or to see Youtube stars emerge. However, I liked that he shows that this change in distribution leads to more efficient markets. At the first chapters I was a bit annoyed because he hyped his findings. Later though, he got more down-to-earth and agreed that we won’t only consume niche products rather that success will continue to arise but they won’t hit so hard. Nice book.
What is it about?
In the last twenty years business model innovation became an important term. Some examples are Amazon, which decided to sell a larger variety of books than usual or Google, which improved PPC advertising. Alexander Osterwalder and Yves Pigneur wrote about these and more companies in Business Model Generation and explain how to come up with a new business model.
What can I learn?
The Business Model Canvas: Here you can see the Business Model Canvas which is quite self-explanatory. You can download a larger version (with explanations) directly from their site. This is the basis for the whole book and method. You can see that the right side focuses on the customer (Customer Relationship, Channels, Revenue Stream, Customer Segment, Value Proposition) and the left side focuses on your internal work (Key Partners, Key Activities, Key Resources, Cost Structure, Value Proposition).
Let your mind wander: One great thing of the Canvas is that you can start collecting individual ideas for every panel. Try different combinations and be crazy. That is a great way to explore business models you never thought of. After your brainstorming session it’s time to reduce the model to a few realistic ones.
Use your waste: If you look on the left side, you got your internal background for offering the right side. Amazon, e.g. needs a sophisticated IT infrastructure for lots of items online. They used their waste to build Amazon Web Services which offers cloud computing and storage for everybody. What’s the waste in your industry and how can you use it?
Actually, I wasn’t really overwhelmed after reading this book. I thought that It’s a nice canvas but not overwhelming. Then I used the Business Model Canvas and it was pretty good. I saw people modifying it for their industry and this was impressive. In conclusion, I think it is sufficient if you download the Business Model Canvas, study on some existing Canvases of Facebook, Zynga or Kiva and then go straight creating your own.